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July 6, 2007

Budget Cycles, Political Rhetoric and Bureaucracy

George Wenschhof

The discussion surrounding the approval of a government's annual budget typically elicits political rhetoric from elected officials. The resolution of Maryland's projected $1.5 billion state structural budget deficit for next year is no different. It resulted from a projected shortfall in revenue that is used to pay for existing services provided by the state.

Interestingly, an entity that has tremendous influence, some say the most influence, in the budget process is one that is not even elected by the voters.

It is not even one of the three branches of government. It is not the Executive (president, governor, mayor), or the Legislative (congress, state assembly, local council), or the Judicial (supreme court, circuit court, district court) Branch which make up our three branches of government.

This entity is the bureaucracy created by the elected officials to administer the programs that provide services to the public.

While government-funded agencies continue to operate in the same manner year after year, so do the major political parties vying to represent America's interests.

Republican rhetoric is centered on less tax and less government and the Democrats counter with what essential service - that is currently being provided for the public - are you going to cut? Neither side offers a change in the way services are presently being provided.

Also demonizing the opposition continues to be a technique used to justify a position while galvanizing and strengthening a support base.

Conservatives rail about the wild-eyed, spend-happy liberals and liberals counter with horror over narrow-minded and insensitive neo-cons.

While politicians are spewing their rhetoric, administrators of public agencies are working hard behind the scenes to justify funding levels they have requested.

So, instead of creating new ways to provide efficient and cost effective services to the taxpayer, Americans continue to experience an ineffective bureaucracy.

To be fair, achieving results pertaining to establishing a more efficient and cost effective bureaucracy is not an easy endeavor and will only be achieved with bi-partisan cooperation.

When Ronald Reagan was president, he had David Stockman as Budget Director armed with the voluminous Grace Commission Report, which detailed changes needed at the federal level. However, very little reform to bureaucracy was accomplished during the Reagan administration.

It has been said that changing how bureaucracy works is similar to changing the direction of an ocean liner that is moving at full speed by 180 degrees - it can be done, but it takes time.

Gov. Martin O'Malley and Democrat leaders - Speaker of The House of Delegates Michael Busch and Senate President Thomas V. "Mike" Miller, Jr. - know that bridging the gap of a $1.5 billion budget deficit will be difficult.

The governor has repeatedly said "there is more that unites us than divides us" and the upcoming budget talks will severely test this belief.

Political maneuvering has been occurring since the close of the Maryland assembly in April when Democrats Busch and Miller jointly sent a letter to Warren Deschenaux, state director of the Office of Policy Analysis. In their letter they asked him to spell out how a $1.5 billion reduction in the budget would affect services that are presently provided.

This was an obvious pre-emptive strike against what they felt was sure to come from Republicans spouting their less-government and less-tax rhetoric while also hoping to set up the justification to raise taxes that will most likely occur. This report has now been labeled the "doomsday budget," which details cuts in services to the public.

Maryland Republicans, still reeling from their loss of the governorship in the 2006 election, have limited their rhetoric so far to saying this is a problem caused by Democrats. They also criticize newly elected Governor O'Malley for failing to address the deficit this year. They go on to say it will cost the taxpayers additional money if a special session of the General Assembly is held to address this issue. However, they have been busy developing their position on the budget and more rhetoric will surely follow.

Meanwhile, Governor O'Malley has asked his cabinet secretaries to present him with a total of $200 million in cost reductions within their respective agencies for next fiscal year. This has already been provided and he plans to present it to the Board of Public Works on July 11.

Already, responses from government-funded agencies are being heard. Recently a statement attributed to the University of Maryland talked about it being difficult to provide quality education with cuts in the budget.

Other government-funded agencies will also join the fray and predictably will share their opinions with elected officials and the public as to the level of funding they should receive in order to provide the level of service the public desires.

Additional increases in taxes are, of course, being mentioned and a new term being circulated in regard to this is the need to "modernize" taxes. The most common increases being discussed are the gasoline and cigarette tax; but don't leave out income tax. Adding a tax to the already high cost of gasoline without providing reasonable alternative transportation plans would appear to be a recipe for disaster for any politician.

Discussions surrounding legalizing video slot machines in Maryland are back with a vengeance. However, a major difference is whether or not the revenue generated would be applied to the structural (operational) budget deficit or would it be applied to capital improvement projects (CIP) such as road and school construction?

Senator Miller has stated that he feels the revenues generated from slots would reduce the budget deficit by $800 million. While Governor O'Malley says he does not feel comfortable balancing the operating budget with revenues from slots.

Instead he feels that revenue generated from slots placed at existing race tracks only, should go specifically toward the CIP earmarked for school or road construction.

How to address Maryland's $1.5 billion budget deficit will dominate political discussion from this point on until a 2008-2009 budget is approved.

Resolving this monetary shortfall is an important issue for all Marylanders. Governor O'Malley's initiative State-Stat, a performance measurement system, is a move in the right direction toward more efficient government, but more initiatives are needed.

Let's hope that a cooperative bi-partisan approach is taken to balance the budget that includes a comprehensive re-organizational analysis of the current bureaucratic structure that exists in the state today.

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